I don't think anyone disputes that scenario 1 represents a loss of income to that couple. However just because they are used to that income, it doesn't mean it is an entitlement. Scenario 1 represents untaxed company profits being distributed at the expense of the net tax pool.
Not paying cash reimbursement from the tax office ensures company profits are not being distributed untaxed.
The only issue I see here is that this couple has planned their retirement investment earnings using the existing law and now it is to be changed.
There would be a case of transitioning to this and not making it retrospective or putting a ceiling on cash reimbursements.
